TRANSCRIPT

JEFFREY BROWN: Stocks rallied around the world today, after news of a debt crisis deal in Europe.

European exchanges were up as much as 6 percent. And on Wall Street, the Dow Jones industrial average soared 339 points, nearly 3 percent, to close at 12,208. The Nasdaq rose nearly 88 points to close at 2,738.

Investors everywhere were carried forward by the long-awaited announcements from Brussels. It was the diplomatic version of an all-nighter, and leaders of the 17 eurozone nations emerged early this morning declaring success.

German Chancellor Angela Merkel is head of Europe’s largest economy.

ANGELA MERKEL, German chancellor (through translator): I do believe that we were able to live up to expectations, that we did the right thing for the eurozone, and this brings us one step further along the road toward a good and sensible solution.

I always said that we wouldn’t be able to do this overnight, but this now brings us to stability and a stable currency union.

JEFFREY BROWN: Greece’s huge debts, along with shaky economies in Portugal, Italy and Spain, have all contributed to fears that the euro system could collapse, and trigger a new global recession.

The agreement has three main components. First, European banks will take a so-called haircut, voluntarily writing off 50 percent of what they’re owed by Greece. That comes to some $139 billion.

The leaders also asked that banks recapitalize by adding nearly $150 billion to their reserves. The goal is to insulate them from potential defaults by national governments. And the agreement seeks to increase the eurozone bailout fund to $1.4 trillion, more than double its current size.

There was little detail, though, on how all of that would be accomplished. But French President Nicolas Sarkozy said the plan addressed one of his primary concerns:

NICOLAS SARKOZY, French president (through translator): As France has been asking from the beginning, we have excluded the possibility of a Greek default. The private sector has written off half of the debt that it holds.

JEFFREY BROWN: The new framework was of particular relief to Greek Prime Minister George Papandreou, whose country has been teetering on the brink of default, despite $150 billion in rescue loans.

GEORGE PAPANDREOU, Greek prime minister (through translator): I think we managed to escape from this trap. The fact that we are still here today is a big achievement for the Greek people. So today I think we can close a chapter on the past, and I think that now we will start with all our strength to begin work for a new future for our country.

JEFFREY BROWN: And, in Washington today, President Obama called the agreement an important first step.

PRESIDENT BARACK OBAMA: We have seen that the message that they are going to deal with this in a serious way has calmed markets all around the world. It will help lay the predicate for long-term economic growth, not only in Europe, but around the world. The key now is to make sure that it is implemented fully and decisively. And I have great confidence in the European leadership to make that happen.

JEFFREY BROWN: But not everyone in Europe shared the optimism. There were warnings in Greece, where austerity measures have already triggered sometimes violent protests.

YANIS VAROUFAKIS, University of Athens: There’s absolutely nothing in the package that was agreed that gives us even a modicum of hope that anything along the lines of — along developmental lines is happening.

JEFFREY BROWN: Concerns also linger for Italy, the continent’s third largest economy. Prime Minister Silvio Berlusconi has been under pressure to deal with his country’s heavy indebtedness. And Berlusconi did, in fact, present a hastily constructed package of reforms last night in Brussels.

SILVIO BERLUSCONI, Italian prime minister (through translator): The guarantee is that if we don’t respect our commitments, we won’t be credible anymore. They are commitments and we have assumed responsibility for them, and Italy will this time again respect its commitments, as it always has.

JEFFREY BROWN: Still, there are questions about Berlusconi’s ability to implement his plan. And, today, Italy’s largest trade union vowed to fight it.

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